AI could trigger global economic downturn, Bailey warns G20

Andrew Bailey, the governor of the Bank of England, has cautioned G20 finance ministers that artificial intelligence could potentially trigger a global economic downturn while posing severe cyber security threats to financial systems worldwide.

In an open letter addressed to finance ministers on Monday, Bailey emphasized that any collapse in the rapid growth of the AI sector could spark a future market correction that ripples across the globe. He also urged worldwide enterprises to brace themselves for security breaches capable of simultaneously disrupting multiple corporations.

Earlier in the month, a coalition of 100 prominent technology firms—including Google, Microsoft, Anthropic, and OpenAI—urged governments and global groups to urgently reinforce their cyber defenses before artificial intelligence advances beyond human operational control.

Stock photo for illustration only, not from the actual event

Addressing the G20, Bailey explained that the core issue is not simply rising investor borrowing, but how financial leverage interacts with inflated asset valuations and market concentration, particularly pointing out the growing cross-investments between AI developers and major cloud hyperscalers.

"The issue is not simply that investors are borrowing more, but that leverage is interacting with high valuations and market concentration, in particular the increasing cross-investment between artificial intelligence (AI) companies and hyper scalers, in a way that could amplify a future market correction."

Andrew Bailey

Writing in his capacity as chairman of the Financial Stability Board (FSB) international watchdog, Bailey called on financial regulators to establish appropriate frameworks ensuring the safe and responsible deployment of AI models globally amid ongoing energy market volatility.

Source: BBC Business